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Chrysler Idles Plants Over Dispute With Plastech
from automotive news:DETROIT -(Dow Jones)- Chrysler LLC said Monday it idled four assembly plants and may close other production operations in the wake of a contract dispute with bankrupt parts maker Plastech Engineered Products Inc.
The auto maker is idling its Sterling Heights, Mich.; Newark, Del.; Toledo, Ohio and Belvidere, Ill. assembly plants affecting 10,500 workers, spokeswoman Michele Tinson said. Chrysler is seeking permission from a federal bankruptcy court to access its machines in Plastech plants that exclusively make Chrysler parts.
Plastech, which makes interior trim, underhood components, bumper and other exterior components and cockpit modules, filed for bankruptcy Friday after Chrysler, its fourth-largest customer, pulled the contracts and it couldn't get any financial aid from its remaining customers to avoid Chapter 11. As part of the filing, the court issued an automatic stay freezing all assets.
Chrysler had a plan in place to switch its orders to other suppliers such as Magna International Inc. (MGA), a person familiar with the situation said. Those plans were trumped by Plastech's filing, derailing a move that could been completed in the event of a production disruption, the person said. Auto makers contractually own many machines at supplier plants that build their exclusive parts and have the option of repossessing them at any time.
fanPlastech bankruptcy could shut all of Chrysler
Plastech supplies Chrysler about 500 types of trim, such as door panels, floor consoles and engine covers. Losing those parts " will in turn halt the production of (Chrysler's) entire corporate fleet of vehicles, idle at least 14 plants and lay off associated workers for an undetermined amount of time," Chrysler said in the court documents.
The automaker is asking U.S. Bankruptcy Judge Phillip Shefferly to let Chrysler take immediate possession of its tooling in Plastech's plants. Plastech opposes the motion, saying its business assets are protected by bankruptcy law.
Chrysler tried to collect its tools Friday, prompting the Chapter 11 petition.